Billing: The Killer Application for WAP?

The Killer Application for WAP

By Mike Banahan

The mobile phone / mobile computing / WAP industry seems to be surrounded by an odd set of beliefs about how it is going to make money. The marketing and commercial people — journalists too - persist in talking about all kinds of things that seem to me to be at best only a small part of the picture, whilst (to borrow John Cleese's term) the absolutely bloody obvious is staring them in the face. Just about everyone who isn't management or marketing profoundly disagrees and does seem to have spotted the obvious. Why that might be I can't say, but it seemed worth writing down - it'll be interesting to see who is right in the end.

This all came to our attention because as a speculative exercise we had built our own location-enabled website Somewherenear and set about doing some basic guerilla marketing to see if anyone with bags of money would come and throw dotcom cash around. Sad to say, they haven't yet, though we live in hope. As one of our bits of directed opportunism we built a WAP interface for it, turning it into a WAPsite, so we could press release the fact on the back of an evident appetite for WAP stories in the media. A gratifying number of outlets picked up the story and ran it. It has to be the best return on investment we've made for a while, since the WAPping took less than a day for the first cut, but the feedback from the press coverage has been very useful. (There is an i-mode interface too, which at least has the advantage of being visible to an ordinary web browser).

What surprised me was that on the back of that, we got asked repeatedly about the killer application. Would it be location-aware services that transform everyone's lives and sprinkle the stardust onto WAP phones that turns them into must-haves instead of geeky toys? A different thread was about how the walled-garden approach — closely guarded portals run by the phone companies with no access to outsiders - would be the real money-spinner. Those two at least have a few second's plausibility about them, but then some other bizzarre suggestions got made and I started wondering if all those microwaves really had affected peoples' brains.

It may help to get an insight into the way the industry thinks by glancing through Rohit Khare's description of the WAP technology — anyone who reads that can either disbelieve him or start asking serious questions about how the decisions get made. For businesses whose purpose is to connect people, they seem at times to be oddly disconnected from the way everyone else thinks. This is commonplace in the telephony industry which forms a kind of walled-garden all of its own. If you want a good laugh take a look at the addressing structure in X.25 which uses decimal numbering - four bits used to count up to ten - because there aren't sixteen holes on a rotary-dial telephone.

Let's look at a couple of the less likely ideas before hitting paydirt.

Walled Gardens

Believe it or not, some of the telcos (mobile phone operators) will tell you seriously that they plan to make a killing by setting up closed WAP portals that only their customers can access and which their customers will be compelled to use. This loony scheme is presumably the outcome of a few moments' thinking from someone who has never used the web or who just doesn't understand that it's free access to information of every kind that makes the Internet/web combination so successful around the world. Never underestimate the ability of Bricks-and-Mortar marketing people to misjudge how the Net works best, few of them have had the luxury of taking time to understand it.

It's true that there is presently some advantage to a site owner in being on a mobile operator's portal — the phones are usually preprogrammed to access that first, so it might be worth a few percent in the negotating game - but balance that by asking who is going to stay with an operator that prohibits open access to other sites? Dozens of WAP bookmark sites are springing up now and whilst there will always be plenty of people who can't figure out how to get off their operator's portal (just like those who can't program a video recorder), there is no shortage who can figure it out. The biggest growth in mobile phone usage is the youth market, the able and adaptable segment.

The value of being on the portal will erode quickly; the value of closed portals is actually negative in that it will quickly lose you customers.

Location Aware Services

Before long mobile phones will start being able to provide location information. This will be extremely useful — being able to program the phone with your preferences for drink, food, lodging, dating appetites and a dozen other things, then pressing the button that says 'find me one nearby' - these are opportunities that the fixed Internet hardly addresses today. That's what prompted us to build our geographic search engine.

Applications that take into account location and timeliness will undoubtedly grow as phones make both possible. I have a suspicion that dating services may well become extremely popular and probably some less savoury activities too. The phone carries with it anonymity, geography and 'now' in ways that desktop computers will never match — and in the UK there is already one mobile phone for every second person; some other countries have even higher rates of uptake. When you can ask for something nearby and combine that with up-to-date information about its availability, then lot of new options emerge.

It's worth dwelling for a moment on the dimension of time, which most of the pundidtry seems to have missed. Geography matters to us for a number of reasons, amongst the most important being that distance has so much effect on cost and time. Places far away are expensive and time-consuming to reach. If you want something quickly — a meal, a drink, some other creature comfort - then you need to know not only that it is near, but also that it is available and available now. You probably don't want to know of a great restaurant, or theatre show, or potential partner if there is currently no availability. Using a mobile carries a now-ness with it that desktop web browsing rarely does. The successful location-aware services will have to be time-aware too - geo-temporal portals - to hit their markets well.

There is a fair amount of hot air being spoken about using `push' features in conjunction with location awareness. I've heard several people suggest that shopowners might like to push ads and special offers out to people walking down the street, so when you get outside the shop your phone tells you about whatever is on offer today. That seems a bit far-fetched, but I'm indebted to Chris Morrow who came up with a more reasonable scenario: a nightclub owner spots that things are not very busy that night and so pays to send an SMS to all known youngsters within five miles telling them that drinks are half-price for an hour. There is a ring of plausibility to that one. We have also kicked around ideas about running treasure hunts over location-aware phones, where you have to ring in your answer to the clue from the right place — no cheating possible - which might prove to be popular. Hundreds of similar ideas abound. Most of them either overtly or covertly recognise the time dimension too, so expect a blinding flash of the obvious to descend on the industry soon and we'll shortly hear them acknowledging the importance of the temporal portal.

But is this the killer application? I doubt it. Important yes, but essental? No.

The Real Killer

It seems to me that the obvious killer application is mundane, low-tech but overwhelmingly important: billing. The phone operators run billing systems that will happily deal with large numbers of low-value transactions, down to a few pence/cents/whatever. They aggregate those into detailed monthly bills and are ideally set up to extract that from you whether it's through prepayment or credit schemes. They have to have that stuff, it's all there, working and paid for.

Couple that with Bluetooth technology so that the phones can talk wireless to nearby devices like vending machines and cash registers: you have the killer. You will be able to pay for just about anything in a shop or from a machine using the `vend' button on your phone. You will be able to pay for goods and services bought remotely through WAP/i-mode or whatever in the same way, consolidated on your monthly bill. Within a few years the mobile phone will have become your credit card too.

This isn't just important, it is crucial. One of the biggest barriers to providing high quality services over the Internet has been the lack of a micropayment model, despite the efforts of dozens of cybercash companies. Credit cards work for large payments, but nobody has managed to get acceptance for a fractional-penny charging scheme. That has probably been a boon to the overall success of the Internet, because instead of just wanting money, most companies have had to come up with creative schemes for giving stuff away and still benefiting — we are all mostly better off as a result - but now the alternative scheme gets a chance. Want to know the football scores? Sure, but the information provider will charge you a penny (maybe). Some people will offer it free, others will try to charge. A mixed micropayment community has the chance to emerge, along with real payment for tangible goods, all on the same bill and run by an organisation that you clearly trust already.

If that isn't the killer, I don't know what is. All the rest is tosh.

23rd June, 2000